AMERICAN BIOPHYSICS v. DUBOIS MARINE SPECIALTIES

Citation Codes

Equivalent Citations

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Docket Number

C.A. No. 05-321-T.

Motions

Motion to dismiss : Denied Defendant

Attorney(S)

Justin T. Shay, Cameron Mittleman, Providence, RI, for Plaintiff. David J. Strachman, McIntyre, Tate, Lynch Holt, Providence, RI, for Defendant.

Judges

Ernest C. Torres

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Smart Summary

Factual and Procedural Background

American Biophysics Corporation ("ABC"), a Delaware corporation with its principal place of business in Rhode Island, brought this action against Dubois Marine Specialties ("Dubois"), a Canadian corporation based in Manitoba, for breach of contract or alternatively to recover on a book account or for goods sold and delivered. The parties entered into a Non-Exclusive Distributorship Agreement on February 19, 2002, under which Dubois was to purchase and resell ABC's "Mosquito Magnets." The Agreement required payment within thirty days of invoice and included a provision for interest on overdue amounts. It also contained a forum selection clause specifying that Rhode Island courts have exclusive jurisdiction over disputes arising from the Agreement. Dubois moved to dismiss the complaint on the grounds of forum non conveniens and lack of personal jurisdiction.

Legal Issues Presented

Whether the forum selection clause in the Agreement is valid and binding, thereby waiving Dubois's right to challenge personal jurisdiction.
Whether Dubois's motion to dismiss on the grounds of forum non conveniens is proper given the forum selection clause.
Whether the United Nations Convention on Contracts for the International Sale of Goods ("CISG") governs the Agreement and precludes this Court’s jurisdiction.

Arguments of the Parties

Defendant's Arguments

Dubois asserted that it has no contacts with Rhode Island and thus challenges personal jurisdiction.
Dubois contended that the CISG applies to the Agreement, which it suggested might preclude litigation in Rhode Island.
Dubois claimed inconvenience in litigating in Rhode Island, noting it is a small, family-run business compared to ABC’s large multinational presence, and indicated future counterclaims would need to be adjudicated in Canada.
Dubois argued that the forum selection clause should be viewed as a contract of adhesion and that the clause does not expressly exclude the CISG under Manitoba law.

Plaintiff's Arguments

ABC relied on the forum selection clause in the Agreement, which designates Rhode Island courts as having exclusive jurisdiction.
ABC argued that the CISG is inapplicable because the Agreement contains a choice of law provision selecting Rhode Island law, which excludes the CISG’s application.
ABC contended that Dubois failed to show any evidence of fraud, undue influence, or that litigating in Rhode Island would deprive Dubois of its day in court.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Microfibres Inc. v. McDevitt-Askew, 20 F.Supp. 2d 316 (D.R.I. 1998)	Defendant may waive personal jurisdiction challenge by agreeing to a forum selection clause.	Supported the principle that the forum selection clause waives Dubois’s personal jurisdiction defense.
National Equip. Rental Ltd. v. Szukhent, 375 U.S. 311 (1964)	Parties may agree in advance to submit to jurisdiction of a given court.	Confirmed enforceability of forum selection clauses as waivers of jurisdictional challenges.
Royal Bed and Spring Co., Inc. v. Famossul Industria E Comercio de Moveis LTDA., 906 F.2d 45 (1st Cir. 1990)	Forum non conveniens cannot override a valid forum selection clause.	Established that inconvenience alone does not invalidate a forum selection clause.
The Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972)	Forum selection clauses are prima facie valid and enforceable unless shown to be unreasonable.	Set the standard for enforcing forum selection clauses and the burden on the resisting party.
Fireman's Fund Am. Ins. Cos. v. Puerto Rican Forwarding Co., 492 F.2d 1294 (1st Cir. 1974)	Burden on resisting party to show fraud, undue influence, or substantial inconvenience depriving a day in court.	Applied to find Dubois failed to meet burden to invalidate forum selection clause.
Koster v. Lumbermens Mut. Cas. Co., 330 U.S. 518 (1947)	Litigation must not impose oppressiveness or vexation out of proportion to plaintiff's convenience.	Balanced the inconvenience to both parties, finding no disproportionate burden on Dubois.
Amco Ukrservice v. Am. Meter Co., 312 F.Supp. 2d 681 (E.D. Pa. 2004)	CISG applies only if contract lacks a choice of law provision.	Supported conclusion that CISG does not apply due to Rhode Island choice of law clause.
Delchi Carrier SpA v. Rotorex Corp., 71 F.3d 1024 (2d Cir. 1995)	Parties may contractually choose to be bound by law other than CISG.	Confirmed that choice of law clause excludes CISG application here.
Viva Vino Import Corp. v. Farnese Vini S.R.L., 2000 WL 1224903 (E.D. Pa. Aug. 29, 2000)	CISG governs absent a choice of law provision to the contrary.	Reinforced that the choice of Rhode Island law excludes CISG.
Fercus, S.R.L. v. Palazzo, MP, 2000 WL 1118925 (S.D.N.Y. Aug. 8, 2000)	CISG applies only when contract lacks choice of law provision.	Supported court’s exclusion of CISG based on Agreement’s choice of law.
Claudia v. Olivieri Footwear Ltd., 1998 WL 164824 (S.D.N.Y. Apr. 7, 1998)	CISG governs contracts between signatory nations absent contrary choice of law.	Further confirmed exclusion of CISG by choice of law clause.
Summit Packaging Sys., Inc. v. Kenyon Kenyon, 273 F.3d 9 (1st Cir. 2001)	Forum selection clause specifying submission to a forum excludes all others.	Supported enforcement of the exclusive jurisdiction clause in the Agreement.
Lambert v. Kysar, 983 F.2d 1110 (1st Cir. 1993)	Forum selection clauses with mandatory language will be enforced.	Confirmed the mandatory nature of the forum selection clause here.
Docksider, Ltd. v. Sea Tech., Ltd., 875 F.2d 762 (9th Cir. 1989)	Forum selection clause enforcement where venue is specified with mandatory language.	Supported the court’s conclusion on mandatory jurisdiction provision.

Court's Reasoning and Analysis

The court began by recognizing that forum selection clauses are generally enforceable and serve as a waiver of personal jurisdiction challenges. It emphasized that such clauses are prima facie valid unless the resisting party can demonstrate that enforcement would be unreasonable due to fraud, undue influence, or severe inconvenience depriving the party of its day in court. Dubois failed to provide any evidence of fraud or undue influence and did not show that litigating in Rhode Island would effectively deny it access to justice. The court also noted that Dubois's claims of inconvenience were insufficient, especially since ABC would face comparable inconvenience if forced to litigate in Manitoba.

Regarding Dubois's invocation of the CISG, the court explained that the CISG applies only when the contract lacks a choice of law provision. Since the Agreement explicitly states that it is governed by Rhode Island law, the CISG was excluded. Furthermore, the court rejected Dubois's argument that Manitoba law and the CISG should control, holding that the forum selection clause clearly vests jurisdiction in Rhode Island courts. The court thus found no basis to dismiss the case for lack of personal jurisdiction or forum non conveniens.

Holding and Implications

The court DENIED Dubois's motion to dismiss the complaint.

This decision enforces the forum selection clause in the parties' contract, confirming that Dubois waived its right to challenge jurisdiction and venue in Rhode Island. The ruling affirms that the CISG does not apply when a contract contains a valid choice of law provision to the contrary. The direct effect is that the case will proceed in Rhode Island federal court. The opinion does not establish new legal precedent beyond applying well-settled principles regarding forum selection clauses and the CISG's applicability.

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AMERICAN BIOPHYSICS CORP. Plaintiff, v. DUBOIS MARINE SPECIALTIES, A/K/A DUBOIS MOTOR SPORTS Defendant.

MEMORANDUM AND ORDER DENYING DEFENDANT'S MOTION TO DISMISS THE COMPLAINT

TORRES, Chief Judge.

American Biophysics Corporation ("ABC") brought this action against Dubois Marine Specialties ("Dubois") for breach of contract or, alternatively, to recover on book account or for goods sold and delivered. Dubois has moved to dismiss on the grounds of forum non conveniens and lack of personal jurisdiction. For reasons hereinafter stated, that motion is denied.

Background

ABC is a Delaware corporation with its principal place of business in North Kingstown, Rhode Island. Dubois is a Canadian corporation with its principal place of business in Selkirk in the Province of Manitoba, Canada.

On February 19, 2002, the parties entered into a "Non-Exclusive Distributorship Agreement" (the "Agreement"), pursuant to which Dubois was to purchase and resell "Mosquito Magnets" manufactured by ABC, which are designed to attract and kill mosquitoes. Agreement ¶ 1. The Agreement required Dubois to make payment within thirty (30) days after receiving ABC's invoice and it provided for interest on overdue amounts "at the greater of (a) eighteen percent (18%) per annum or (ii) the highest rate of interest allowed by the laws of the State of Rhode Island." Agreement ¶ 2b).

Subsection 11h) of the Agreement provided:

This Agreement shall be construed and enforced in accordance with the laws of Rhode Island. The parties agree that the courts of the State of Rhode Island, and the Federal Courts located therein, shall have exclusive jurisdiction over all matters arising from this Agreement.

The complaint alleges that Dubois owes $513,985.94 for goods sold and delivered, plus $96,512.75 in interest accrued through July 22, 2005, the date on which suit was commenced.

In support of its motion to dismiss, Dubois has filed an affidavit stating, in effect, that it has no contacts with Rhode Island; an excerpt from the United Nations Convention on Contracts For The International Sale of Goods, 1980 ("CISG"); and copies of Manitoba statutes that deal with excluding the CISG from contracts to which it might otherwise apply.

Analysis

I. Effect of Forum Selection Clause

It is well established that a party may waive its right to challenge personal jurisdiction by entering into a contract that contains a forum selection clause. Microfibres Inc. v. McDevitt-Askew, 20 F.Supp. 2d 316 (D.R.I. 1998) (defendant may waive her right to challenge personal jurisdiction by agreeing to a forum selection clause.) See National Equip. Rental Ltd. v. Szukhent, 375 U.S. 311, 315-16, 84 S.Ct. 411, 414, 11 L.Ed. 2d 354 (1964) ("parties to a contract may agree in advance to submit to the jurisdiction of a given court.").

It is equally well established that a party that has agreed to be bound by a valid forum selection clause cannot assert forum non conveniens as a ground for dismissing a suit brought in the chosen forum. See Royal Bed and Spring Co., Inc. v. Famossul Industria E Comercio de Moveis LTDA., 906 F.2d 45, 49 (1^st Cir. 1990) ("[A] showing of inconvenience as to a foreign forum would not be enough to hold a forum-selection clause unenforceable, especially if that inconvenience was known or contemplated by the parties at the time of their agreement."). Therefore, in this case, the threshold question is whether the forum selection clause contained in subsection 11(h) of the Agreement between ABC and Dubois is valid and binding.

II. Validity of Subsection 11(h)

Forum selection clauses are considered "prima facie valid and should be enforced unless enforcement is shown by the resisting party to be `unreasonable' under the circumstances." The Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10, 92 S.Ct. 1907, 1913, 32 L.Ed. 2d 513 (1972). Thus, a party challenging a forum selection clause must present "evidence of fraud, undue influence, overweening bargaining power or such serious inconvenience in litigating in the selected forum that it is effectively deprived of its day in court." Fireman's Fund Am. Ins. Cos. v. Puerto Rican Forwarding Co., 492 F.2d 1294, 1297 (1^st Cir. 1974).

Here, Dubois has made no such showing. Dubois has presented no evidence of fraud or undue influence and has made no showing that litigating this dispute in Rhode Island, as agreed, would, effectively, deprive Dubois of its day in court. See Fireman's Fund Am. Ins. Cos., 492 F.2d at 1297 (burden is on the resisting party to present evidence that "it is effectively deprived of its day in court."). Dubois hints at suggesting that Subsection 11 (h) should be viewed as a contract of adhesion by describing ABC as a "large manufacturer" with "customers throughout the world" and by characterizing its own operation as a "small, Manitoba based, family run" dealership. However, Dubois states that it has organized a network of over 100 Canadian dealers to distribute the Mosquito Magnets and that its annual gross revenue exceeds $1,000,000, and there is no indication that it was under any compulsion to enter into the Agreement with ABC.

Dubois also claims that this is an inconvenient forum because it intends, in the future, to "raise counterclaims that must be adjudicated in Canada." However, no such claims have yet been brought and Dubois offers no reason why they could not be litigated in this Court.

Moreover, while it may be inconvenient for Dubois to litigate in Rhode Island rather than in Manitoba, it would be equally inconvenient for ABC to litigate in Manitoba. Nor has Dubois established that litigation in the contractually chosen forum would establish "such oppressiveness or vexation . . . as to be out of all proportion to plaintiff's convenience." See Koster v. Lumbermens Mut. Cas. Co., 330 U.S. 518, 524, 67 S.Ct. 828, 831-32, 91 L.Ed. 1067 (1947).

III. Effect of CISG

Dubois seeks to avoid the forum selection clause by asserting that the Agreement with ABC is governed by the United Nations Convention on Contracts for the International Sale of Goods, ("CISG"), codified at 15 U.S.C. App. (West 1998), to which the United States and Canada are both signatories, but it fails to explain how the CISG would preclude this action from being brought here.

In any event, it appears that the CISG is inapplicable. The CISG governs "contracts for the sale of goods where the parties have places of business in different nations, the nations are CISG signatories, and the contract does not contain a choice of law provision." Amco Ukrservice v. Am. Meter Co., 312 F.Supp. 2d 681, 686 (E.D. Pa. 2004) (emphasis added); see 15 U.S.C. App. at Art. 1(1) (a). More specifically, Chapter I, Article 6 of the CISG provides that: "The parties may exclude the application of this Convention or, subject to Article 12, derogate from or vary the effect of any of its provisions."

Here, as already noted, subsection 11 (h) of the Agreement provides that the Agreement "shall be construed and enforced in accordance with the laws of the state of Rhode Island." That provision is sufficient to exclude application of the CISG. Delchi Carrier SpA v. Rotorex Corp., 71 F.3d 1024, 1028 n. 1 (2d Cir. 1995) ("[T]he Convention makes clear that the parties may by contract choose to be bound by a source of law other than the CISG, . . ."); Viva Vino Import Corp. v. Farnese Vini S.R.L., 2000 WL 1224903, at *1 (E.D. Pa. Aug. 29, 2000) (CISG governs contracts for sale of goods between parties of signatory nations "unless the contract contains a choice of law provision to the contrary."); Fercus, S.R.L. v. Palazzo, MP, 2000 WL 1118925, at *3 (S.D.N.Y., Aug. 8, 2000) (CISG applies to sale of goods when "the contract between the parties does not have a choice of law provision."); Claudia v. Olivieri Footwear Ltd., 1998 WL 164824, at *4 (S.D.N.Y., April 7, 1998) ("When two foreign nations are signatory to this Convention . . . the Convention governs contracts for the sale of goods . . . absent a choice-of-law provision to the contrary.").

Dubois argues that subsection 11 (h) does not "expressly" exclude the application of CISG as required under Manitoba law. However, Manitoba law does not apply. Furthermore, even if Manitoba law did apply and even if the CISG called for a different forum, the forum selection clause does "expressly" vest jurisdiction in this Court. See Summit Packaging Sys., Inc. v. Kenyon Kenyon, 273 F.3d 9, 13 (1^st Cir. 2001) ("[W]hen parties agree that they `will submit' their dispute to a specified forum, they do so to the exclusion of all other forums."); see also Lambert v. Kysar, 983 F.2d 1110, 1116 (1^st Cir. 1993) (forum selection clause will be enforced "`where venue is specified with mandatory language'") (quotingDocksider, Ltd. v. Sea Tech., Ltd., 875 F.2d 762, 764 (9^th Cir. 1989)).

Conclusion

For all of the foregoing reasons, Dubois's motion to dismiss is denied.

IT IS SO ORDERED.